Profit Tracker: Margins Slip $35 Per Head

Cattle feeding profits declined $35 per head last week, leaving average closeouts with profits of $65. The decline was a result of higher prices paid for the cattle as feeder cattle. Break even prices rose nearly $3 per cwt., according to the Sterling Beef Profit Tracker.

The 5-area direct cash price was steady at $119.84 per cwt., while break evens increased to $115.11 per cwt. The cost of feeder cattle calculated against last week’s marketings climbed $3.02 per cwt., while feed costs increased $9 per head, according to the weekly average calculations.

Beef packer margins declined $42 per head to average $44. The beef cutout dropped $2 per cwt. to $197.58. The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Average feed costs totaled $288 per head, while cattle placed on feed last week have a projected breakeven of $112 per cwt.

The cost of finishing a steer last week was calculated at $1,602 per head, which is $131 more than the $1,471 a year ago. A month ago cattle feeders were earning $90 per head, while a year ago profits were calculated at $135 per head. Feeder cattle represent 74% of the cost of finishing a steer, compared to 75% last year.

Farrow-to-finish pork producers saw their margins remain near breakeven. Profit margins averaged $0.17 per head the previous week. Lean carcass prices traded at $57.41, a decline of $1.46 per cwt. from the previous week. A year ago pork producers lost an average of $8 per head. Pork packer margins totaled $33 per head last week, a decline of $1 per head.

Cash prices for fed cattle are $4 per cwt. higher than the same week a year ago. Lean hog prices are about $3 per cwt. higher than last year.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2017 will average $143 per cow. That would be $34 per head less than the estimated average profit of $177 for 2016. Estimated average cow-calf margins were $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $232 per head in 2017, which compares favorably with average losses of $4.25 per head in 2016. Nalivka expects packer margins to average about $119 per head in 2017, up from $114 in 2016.

For farrow-to-finish pork producers, Nalivka projects 2017 profit margins to average $20 per head, compared to $5 per head last year. Pork packers are projected to earn $25 per head in 2017, up slightly from $24 profit per head in 2016.